Breach of Contract Claims

Breach of contract claims are a fundamental aspect of contract law. They provide a mechanism for parties to a contract to seek redress when the terms of the contract are not adhered to.

At the heart of contract law is the principle that parties entering into a contract are legally bound to fulfil their contractual obligations. A breach occurs when a party fails to perform any term of the contract, whether written or implied terms, without a lawful excuse. This breach can manifest in various ways, such as failing to deliver goods or services, not meeting the quality standards agreed upon, or not completing the performance on time.

Understanding the Terms of the Contract

The terms of the contract are the foundation upon which breach of contract claims are built. These terms can be expressly stated in the contract or implied by fact, law, or custom. Understanding the contractual terms and the parties’ intentions is crucial in determining whether a breach has occurred and what remedies are available.

Types of breaches

There are various types of breaches of contract which include:

Minor Breach

A minor breach, also known as a partial breach or an immaterial breach, occurs when the breach does not go to the core of the contract’s purpose.

This type of breach typically involves a slight deviation from the agreed terms, where most of the contractual obligations are fulfilled, but there are minor discrepancies.

For example, if a contractor completes a job but finishes a few days later than agreed upon, without causing significant harm or financial loss, it might be considered a minor breach.

Material Breach

A material breach is a serious violation that goes to the essence of the contract. It significantly undermines the contract’s purpose and deprives the non-breaching party of the benefits they were entitled to under the agreement. A material breach gives the aggrieved party the right to terminate the contract, in addition to seeking damages. For instance, if a supplier fails to deliver a key component of a product, preventing the product from being manufactured, this would be considered a material breach.

Fundamental Breach

A fundamental breach is one of the most severe types of breaches, indicating a violation that allows the non-breaching party not only to claim damages but also to terminate the contract.

This type of breach indicates that one party has failed to perform a core obligation, which was so essential to the contract that the other party would not have entered into the agreement without the assurance of this obligation being fulfilled. Fundamental breaches strike at the very heart of the agreement.

Anticipatory Breach

An anticipatory breach, or anticipatory repudiation, occurs when one party indicates ahead of time that they will not be fulfilling their contractual obligations. This indication can be either express (verbally or in writing) or implied by actions that make it clear the party will not perform as agreed. The non-breaching party can treat the contract as breached immediately upon this indication, without waiting for the actual time of performance to arrive. They may seek damages or terminate the contract based on the anticipatory breach.

The Process of Making a Contract Claim

To initiate a contract claim, the aggrieved party must prove that a valid contract existed, terms of the contract were breached, and losses were suffered as a result. Documentation such as the contract itself, communications between the parties, and evidence of losses are crucial in substantiating a claim.

Initiating a claim for breach of contract is a structured process that requires careful preparation, understanding of legal principles, and a clear presentation of facts. This process is crucial for enforcing contractual rights and obtaining appropriate remedies for the breach. Below is an in-depth look at the key stages and considerations involved in making a breach of contract claim.

Step 1: Identify the Breach

The first step in making a claim is to clearly identify the breach. This involves reviewing the terms of the contract to determine which contractual obligation has not been fulfilled by the defaulting party. The breach could be related to failing to deliver goods or services, not meeting specified quality standards, or any other failure to comply with the contractual terms. It is essential to establish that the breach is material and goes to the heart of the contract, affecting its very essence and the parties’ intentions.

Step 2: Evidence Collection

Gathering comprehensive evidence is pivotal to supporting the claim. This evidence may include:

• The Contract: The original contract document, highlighting the specific terms that have been breached.
• Communication Records: Emails, letters, texts, and any other communication between the parties that relate to the breach.
• Proof of Damages: Invoices, receipts, and any other documents that can quantify the financial loss suffered due to the breach.
• Witness Statements: If applicable, statements from individuals who can provide firsthand accounts of the breach or its impact.

Step 3: Assessing Damages

Calculating the damages incurred is a critical component of the claim. The aim is to quantify the financial impact of the breach. Damages may include direct losses (e.g., money spent to rectify the breach), consequential losses (further financial damage resulting from the breach), and in some cases, loss of opportunity. It is also crucial to adhere to the duty to mitigate losses, demonstrating that reasonable steps were taken to minimize the financial impact of the breach.

Step 4: Legal Notice

Before formally initiating a claim, it is often advisable to send a legal notice to the defaulting party. This notice should outline the breach, the damages incurred, and a demand for remediation, giving the defaulting party an opportunity to resolve the issue without proceeding to court. This step can sometimes lead to an out-of-court settlement, saving time and resources for both parties.

Step 5: Initiating Formal Proceedings

If the breach cannot be resolved through direct communication or mediation, the next step is to initiate formal legal proceedings. This involves filing a claim in the appropriate court, providing all the necessary documentation and evidence to support the claim for breach of contract. s.

Step 6: Litigation Process

The litigation process can be lengthy and involves several stages, including:

• Pleading Stage: Both parties submit detailed documents (claim form and defence) outlining their positions.
• Discovery: A phase where both parties exchange relevant documents and evidence.
• Pre-Trial: Various pre-trial hearings may occur to set timelines, manage the disclosure of documents, and address preliminary issues.
• Trial: The case is argued before a judge (and sometimes a jury), evidence is presented, and witnesses may be called to testify.

Step 7: Remedies and Enforcement

If the claimant is successful, the court will order remedies for the breach of contract. These remedies may include damages, specific performance, or an injunction against the defaulting party. Following the judgment, there may be additional steps required to enforce the court’s order, especially if the defaulting party does not voluntarily comply with the terms of the judgment.

The Duty to Mitigate

The duty to mitigate requires the non-defaulting party to take reasonable steps to reduce their losses following a breach. This principle ensures that the damages claimed are not unnecessarily inflated and reflect genuine attempts to alleviate the impact of the breach.

Remedies for Breach of Contract

There are several remedies for breach of contract, and the remedy chosen will depend on the type, severity and complexity of said breach.

• Damages for breach of contract: Damages are the primary remedy available to the aggrieved party on a claim for breach of contract. The aim is to compensate the claimant for the loss incurred due to the breach. This requires a clear demonstration that the breach occurred, directly caused a loss, and efforts were made to mitigate this loss.
• Specific Performance: A court order compelling the defaulting party to perform their contractual duties as agreed.
• Termination of the Contract: This allows the non-defaulting party to withdraw from the contract and cease their obligations under it.
• Injunction: A preventive measure aimed at stopping the defaulting party from committing further breaches.

How can ARC Costs assist with Breach of Contract Claims?

Although ARC Costs cannot provide any legal advice or assistance on breach of contract claims, we can introduce you to a solicitor from our network who can help.

In addition to introducing you to a commercial contract solicitor, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist you with your commercial litigation costs issues.

To find out more about how we can provide you with assistance, please get in touch with us at 012014 397302 or email one of our expert team at info@arccosts.co.uk. Alternatively, please use our free chat facility to speak to an expert directly.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.